PGIM Real Estate has expanded its rental housing portfolio in Asia-Pacific through strategic acquisitions and development of a series of properties in Australia, mainland China and Hong Kong

While the company has a significant multi-family portfolio in Japan, the latest rental housing investments in the three markets, acquired on behalf of PGIM Real Estate’s value-add, core and core-plus strategies in Asia-Pacific, mark its strategic expansion into alternative markets with strong local demand for this emerging asset class.

“Shifting demographic trends and worsening home-ownership affordability are driving demand for rental housing across major cities,” says Benett Theseira, head of Asia-Pacific at PGIM Real Estate. “The living sector in Asia-Pacific is significantly undersupplied, presenting strong growth potential for investors. The institutional residential market, which offers high-quality, professionally managed housing units, is in a nascent stage in the region outside of Japan."

In Australia, PGIM Real Estate has formed a joint venture with an integrated property developer to develop a portfolio of residential properties for rent in major cities, aiming to deliver much-needed stock into a hugely undersupplied market.

The JV has acquired two seed assets, one at 458 Wickham Street in Fortitude Valley, Brisbane, and another at 7 Macquarie Street in Parramatta, Sydney.

Both sites were selected on account of their status as key employment, residential and entertainment hubs that are well located relative to public transport. The properties will be the designed as residential-for-rent communities, each comprising approximately 300 smaller-scale apartments, offering high levels of amenity and community but also affordability. The JV aims to develop further projects of similar size, with a portfolio target of 1,250 to 1,500 apartments at completion.

Shanghai apartment building

In mainland China, PGIM Real Estate has entered into a JV with a leading rental apartment operator in the country to acquire a 19-storey purpose-built apartment building in Shanghai. The property comprises over 500 apartments and provides common areas and facilities, including a gymnasium and residents’ lounge.

Sitting on top of the Metro Line, the apartment building is within Baoshan Powerlong City, a commercial hub with a regional shopping mall, office blocks and hotels. Its location and high-quality fittings and furnishings are expected to meet the long-stay living needs of young professionals.

The transactions follow PGIM Real Estate’s acquisition of two hotels in Hong Kong in 2022 and successful completion of the assets’ conversion into modern co-living apartments this year. 

Weave Studios in Kowloon West has been converted to 435 fully furnished studio apartments over 29 floors. Located near the Olympic MTR Station, the property launched operations in May and offers 15,000 square feet of open area with shared amenities, including a theatre, open kitchen and dining space, collaborative workspaces as well as a lounge, gymnasium, yoga room and outdoor terrace. 

Dash Living on Hollywood is a 22-storey former hotel building on 263 Hollywood Road, Central, just a stone’s throw away from the central business district and Soho entertainment district. Through an extensive refurbishment programme, the property is being transformed into a modern co living facility with 148 rooms as well as common areas and community facilities for the tenants.

“Institutional investors like us can play a pivotal role in fostering the growth of this sector by providing an attractive and affordable housing solution for young professionals and other renters in the region” Theseira says. “Despite the challenging market conditions, we believe the rental housing sector will benefit from favourable demographics and strong rental demand growth. We expect the sector to provide the sustainable income and return that investors are seeking in a volatile, inflationary environment.”

PGIM Real Estate is the US$210 billion real estate investment and financing business of PGIM, the US$1.27 trillion global investment management business of Prudential Financial.